CJ Group Chairman Lee Convicted of Embezzlement and Tax Evasion

By Seonjin Cha -
Feb 14, 2014

CJ Group Chairman Lee Jay Hyun was
found guilty of embezzlement, breach of fiduciary duty and tax
evasion, a South Korean court said today.

Lee, 53, head of South Korea’s 14th-biggest conglomerate
whose businesses include food making, media and entertainment,
was sentenced to four years in prison, according to a faxed
statement from the Seoul Central District Court. The court also
fined him 26 billion won ($24 million).

Lee won’t go directly to jail as the court allowed him to
remain hospitalized as he recovers from a kidney transplant
operation in August, according to the statement.

President Park Geun Hye has pledged to crack down on tax
evasion to help fund increased welfare spending, and the
country’s tax agency began 23 separate investigations in May.
The government has targeted the heads of South Korea’s family-run conglomerates, known as chaebol, for tax evasion and
embezzlement in recent years, including Samsung Group and
Hyundai Group, the country’s two biggest.

Lee was found guilty of embezzling 60.4 billion won from CJ
Corp. (001040) to create slush funds, the court said. He also caused
damage to CJ Group’s Japan unit by making it provide guarantees
for personal property purchases in Japan, the court found.

Lee plans to appeal today’s ruling to a higher court, his
attorney Ahn Jeong Ho said in a phone text message.

CJ Group has no comment on today’s ruling, according to an
official at the company’s press office who asked not to be
named, citing company policy.